Mexican president does not ‘rule out’ Pemex listing in local market

Mexican President Andres Manuel Lopez Obrador said Wednesday he did not “rule out” a listing in the local market for oil company Pemex, including issuance of some form of financial instrument, but added such a move to attract new funds is not necessary.

FILE PHOTO: A view of the headquarters of state owned oil company Pemex in Mexico City, Mexico March 5, 2019. REUTERS/Daniel Becerril

Lopez Obrador, who won a landslide election last year on promises that included strengthening Pemex, has favored public spending for the ailing national company such as the recent authorization for a $3.9 billion capital injection from the government that included new tax relief.

Ratings agencies say that is not enough to stabilize Pemex, creaking under $106 billion of debt, and have put the wholly government-owned company’s credit rating at one notch above junk, increasing fears of a downgrade that could raise Mexico’s sovereign borrowing costs.

In response to a question at his regular morning press conference about whether he would consider some form of Pemex listing on the local stock exchange to allow Mexicans to invest in the state-owned oil producer, Lopez Obrador left open that possibility.

“We have healthy public finances, but we do not rule out other options, other alternatives, such as what you asked about,” the veteran leftist said. “We won’t rule that out, but there’s no need for (additional) financing, Pemex has enough budget.”

The government is expected to unveil additional measures this month to support the company.

Without giving details, Lopez Obrador said new plans for the company would be announced on March 18, a national holiday in Mexico that commemorates the 1938 nationalization of the country’s oil industry.

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The finance ministry said this week that $2.5 billion earmarked for a new oil refinery could be spent this year on Pemex exploration and production, comments that were later rebuffed by Lopez Obrador.

Petroleos Mexicanos, as Pemex is formally known, has seen its crude production fall each year since hitting a peak of nearly 3.4 million barrels per day in 2004. Oil output currently stands at about half that, or less than 1.7 million bpd.

As well as its financial debt, the 100 percent state-owned company also shoulders some $70 billion in unfunded pension liabilities.